
Glass-Jlgge)^ 



Book 



SOME COMMENT 

ON 

OVERNMENT OWNERSHIP 

OF 

TELEPHONE 
PROPERTIES 



A Paper Read by Mr. F. H. BETHELL, 
Vice-President New York Telephone Co. 
Before The City Plan Association of 
Albany, N. Y., February 25th, 1914 



1^ nr fi, 



•4- 



HE e9\a 
3^ 



X Some Comment on Government 
; Ownership of Telephone Properties 

A paper read by Mr. F. H. Bethell, Vice-President of the 

New York Telephone Company, before the City Plan 

Association of Albany, N. Y., February 25, 1914. 

Bi^k> 

Mr, Mayor, Mr, President and Gentlemen: 'i^ O 

It is indeed a pleasure to be presented to you by your very excellent 
Mayor, and it is a compliment to have here at the table with me in addition 
to the Mayor of Albany, his Honor, the Mayor of Poughkeepsie, and the 
Honorable, the Chairman of the Public Service Commission, Mr. Decker. 

Here is a question that no man can set aside as one that does not con- 
cern him. It is a great question of public policy that concerns vitally every 
taxpayer, indeed every citizen, of this country. TKere is being aggressively 
advanced at Washington the proposition that there be changed in this nation 
a public policy that is as old as the nation itself. 

THE AMERICAN POLICY. 

The American policy fixed by the fathers has always been that the in- 
dividual should do everything that individuals can do. This policy when 
set up against the European policy, that the Government shall do everything 
that Government can do, shines out gloriously as the policy that has produced 
a nation such as the world had never known before — a democracy, a civili- 
zation — that has challenged the admiration of the world. 

Approached as a theoretical question, it is debatable whether or not 
under our form of government (having in mind at all times the American 
notion as to the functions of government) the so-called public utilities should 
be owned by government or by individuals; individuals banded into cor- 
porations, if you please, amenable to the laws and regulations established 
by government. 

Sober reflection, I am inclined to believe, will take many of you, as it has 
taken me, to that great body of our citizens who hold that even in theory 
the government cannot justify a departure from past practices so radical as 
is contemplated by those who advocate government ownership. 

A PRACTICAL PEOPLE. 

But we are nothing if not a practical people ; and it is the practical, and 
not the theoretical, side of the question that we are going to consider. 

POSTALIZATION. 

"Postalization" is a new word. It can be found in no dictionary within 
the reach of the ordinary man. It was coined, no doubt, by the man in Con- 
gress, Mr. Lewis of Maryland, who would turn the wire service of the coun- 
try over to the Post Office Department. 



t 



The postal service — the service that is pointed to as the evidence 
to prove the government's ability to handle the wire service — is, I believe, 
efficient (some do not agree with me), but what is Postal Service? The 
Post Office performs but a very small part in the country's mail service. The 
transportation of the mails is in so great a measure handled by the railroads 
and steamship companies as to render all other mediums almost if not quite, 
negligible. In many communities the citizen must go to the post office both 
to send and receive his mail. The postmaster does little more in getting 
mail to and from his office than does the messenger boy in collecting or de- 
livering telegrams. The Post Office Department does not own even the post 
office buildings it occupies ; the mail cars belong to the railroads ; the pneu- 
matic tubes, in cities like New York, and even the mail wagons, are owned 
and operated by private companies. 

The Post Office here at Albany receives mail and delivers it just as the 
American District office receives telegrams and delivers them. The mail 
is brought to the post office from distant parts through agencies that the post 
office neither owns nor controls, just as telegrams come through agencies 
not owned by the American District. In a word, the Post Office is the 
A. D. T. of the transportation companies. 

THE TELEPHONE SERVICE. 

Telephony needs no such auxiliary organization to perfect its service. 
The telephone itself, at every man's elbow, holds ready for delivery the mes- 
sage that comes over hills, under rivers, across mountains, and through great 
central offices; or takes for delivery the message and delivers it directly into 
the ear of the person for whom it is intended. I submit, sirs, that there is 
nothing in the postal service analogous to this. 

The Bell Companies alone own and operate, in connection with its busi- 
ness, equipment to the value of $765,000,000. The construction and opera- 
tion of the vast and complex telephone system is an entirely different problem 
from collecting and delivering the mail. ^ 

The telephone, as was pointed out by his Honor the Mayor, is essentially 
American. It was invented here, has been improved here,' and its uses have 
been developed here as nowhere else on earth. / 

To illustrate the extent to which it has been developed, I direct attention 
to the fact that though the industry is truly one of the inf|int industries of the 
country, it has grown to such proportions that according to reports of the 
United States Census Office it is the fourth largest industry we have in 
investment per capita, yielding only to Iron and Steel, Lumber and Timber, 
and Gas and Heating industries. 

Such is the magnitude of the industry it is proposed to turn over to the 
government. Some quarter of a million workers are now enjoying the full 
benefits of the sick, accident, insurance and pension plans adopted for them 
by the companies. It is now proposed to transfer these workers bodily to 
the government pay roll and in the transfer compel them to surrender all 
the benefits that long and faithful service has brought to them. 



DISTRIBUTION OF THE 

WORLD ^S TELEPHONES 

JANUARY 1, 1913 

13,816,000 

(JPartly Estimated) 

100% 




as^ 



7^ 



J09& 



S&'^o 



60% 



FORM OF GOVERNMENT. 

Is our form of government a better form of government than can be 
found elsewhere? The answer made by all of us, including that vast number 
who have come here from other countries, and who are coming here on 
practically every ship that comes to our shores, is that it is. It is better 
because it offers opportunities to the individual to develop himself while he is 
developing the country's resources, and because it insures freedom while it 
protects life and property. It has left the development of the nation's resources 
to private enterprise and that very fact has prevented the stagnation that ob- 
tains in other countries. There is no instrumentality on earth that does more to 
promote business, to extend civilization, and to make possible our present- 
day standards than the telephone. And it follows then that private enterprise 
here has done far more to extend these things to the people than has public 
ownership abroad. 

— 3 — 



TELEPHONE 5TAT10N5 

COMPARING THE UNITED 5TATE5 WITH EUROPE 

JAN. 1,1913 



NORWAY 
TSpOC 



HOLLAND 
71JZOO 



ITZERLANDl 
9Q!SOO i 



5WIT2CRI 



DENMARK 
116,^00 



SWEDEN 
217,600 



CANADA 
431,000 



BELCiUM 
SSfSQO 



HUNGARY 
75,70O 



I 



iTALY_ 
8972QO 



AUSTRIA 
161,200 



FRANCE 
Z93,200 



RUSSIAN FINLAND! 
317,700 



GREAT BRITAIN 
738,700 



QERMAN EMPIRE 
1,302,700 



UNITED 5TATE5 
6,975,000 



Do you know that in Tokio there are applications for telephone service 
from upward of 30,000 people who cannot be served because the government 
is not equipped to serve them? Telephone subscriptions are dealt in regu- 
larly on the Stock Exchange and bring a handsome price. There is no ques- 
tion that a congestion similar to this would with government ownership come 
into the service here. Only a few days ago the head of the telephone depart- 
ment of a European government said to us : "It is only when the telephone 
facilities that have been provided for a new territory have been used up 
that it is possible to apply for a government appropriation for additional 
facilities. These applications have to pass through the hands of several 
government departments and finally reach Parliament, where the question 
is debated at length, and the time when the money is granted is always un- 
certain, depending largely upon the existing political conditions. After the 
money has been appropriated, the new lines or new buildings that are re- 
quired have to be constructed. In the meantime, the old central office is over- 
loaded with traffic, and of course this interferes with the quality of the serv- 
ice which the operators can furnish." 

BUILDING IN ADVANCE OF REQUIREMENTS. 

Here in America we plan ahead. We study the probable growth and 
build our plants in advance of the time when the facilities will be needed. 

The Bell System plans to spend $60,000,000 in 1914 in extending its lines 
and plant. Since work began on the Panama Canal in 1904, the Bell System 
has spent more money in extending its lines and plant than the United States 
Government has spent to dig the big ditch and buy the right of way. 

Would Congress duplicate the appropriations for the Panama Canal 
every ten years for the purpose of extending the telephone and telegraph 
service? No country owning its wire service has ever made anything ap- 
proaching adequate appropriations for the purpose. 

FINANCING THE PROPOSITION. 

At the outset, a federal bond issue of approximately Two Billion Dollars 
would be required to purchase the telephone and telegraph systems. 

The federal government, it is stated, can borrow money at 3 per cent. 
Its present 3 per cent, bonds are selling around par only because the issue is 
small. A federal bond issue of Two Billion Dollars would be likely to run 
the credit of the government down to a 4 or even a 5 per cent, basis. 

It is for similar reasons that 3 per cent. French Government bonds sell 
at 82, and 3 per cent. German Government bonds sell at 76. 

The national debt of New Zealand, due to such socialistic ideas as are 
involved in the government ownership proposition, is $400.00 per capita. At 
the same rate, the national debt of the United States would be Thirty-Nine 
Billions, instead of One Billion Dollars. We would become a debt-ridden 
country taxed to our eyelashes to meet interest and sinking fund charges, 
and this in addition to having forced upon us a debased, an inefficient, and 
an inadequate wire service. 

— 5 — 



PER CAPITA INVESTMENT OF UE:ADIIMG 

UNITED STATES INDUSTRIES 

AND TOTAL NUMBER OF EMPLOYEES 
JAN. U 1910 



RQ^OENTS CMFUDVEES 




TAXES. 

Now a word about taxes. During 1913 the Bell System alone paid 
$12,000,000 in taxes to the federal government and to the various states and 
municipalities. 

The government pays no taxes, not even on its real estate. 

Government ownership would mean that the $12,000,000 now contributed 
by telephone companies to the government and to the various cities, towns 
and villages, would have to be raised by additional taxation of the whole 
people, whether they are telephone subscribers or not. 

In New York State alone taxes paid by the New York Telephone Com- 
pany last year averaged about three dollars for every telephone in service. 
The city of Albany received last year directly from the Company about 



6 — 



$12,852.00, and indirectly the city received some part of the $336,000.00 in 
taxes paid by our company to the State. The New York Telephone Company 
paid to municipalities last year approximately $2,000,000.00, while to the 
federal government it paid $107,677.00. The income tax law will materially 
increase these taxes paid to the United States. Deficits in government owned 
systems must be met by taxation of user and non-user alike. All would have 
to help pay for service used by some of the people. 

COST OF SERVICE. 

In comparing cost of service here and in Europe, advocates of govern- 
ment ownership make no mention of the absence of taxation in the case of 
European government systems or of the deficit resulting from operations. 
(The British service alone last year showed a loss of $5,700,000.) Nor do 
they refer to the character of the service nor to wages, hours of employment, 
and other conditions of labor. 

Even ignoring these very important factors, the cost to the public here 
and abroad is about the same, as the following figures for the years 1911 
and 1912 compiled from offtcial sources, show : 

Toll and Exchange Exchange 

Earnings Earnings Only 

Per Station : Per Station : 

Average State owned in 7 leading Euro- 
pean countries $36.89 $26.78 

Average Bell Companies 40.14 30.93 

Deduct taxes and make allowance for difference in purchasing power of 
money here and in Europe, and Bell rates will probably average lower than 
rates charged abroad. 

Ours is a twenty-four hour service. Central offtces manned at all hours 
to take whatever traffic is ofTered, is what our people are accustomed to ; 
what, in fact, they demand. 

In the state systems of Europe it is the rule to close up at night. The 
service is actually dead, there is no service at all in a very great many of 
their exchanges. 

TOLL RATES. 

It is like comparing peaches with prunes to attempt to compare our 
toll rates with toll rates in government owned systems abroad. Measured by 
our standards for accuracy and rapidity and for development, there can 
hardly be said to be any toll service in those government owned systems. 

A long distance call in France can be made only after arranging for an 
appointment. A time is set for the call. If not on hand, the subscriber 
loses his place in the appointment list and must make a new appointment. 
If he exceeds his time limit, the connection is cut off while he is still talk- 
ing. In many countries if a business man wants "special service," which 
compares to our regular long distance service, he pays three times the 
regular toll price. 



A Frenchman wishing to make an appointment toll call recently had to 
rise at six o'clock in the morning in order to get a good position on the ap- 
pointment list. On another day he sought the appointment a few hours later 
and was confronted with a 14-hour delay. That, I submit, Mr. Chairman 
Decker, would be a fine thing to attempt to defend before your Commission. 
And yet in a speech delivered in the House of Representatives on Janu- 
ary 16th last, by the Honorable David J. Lewis of Maryland, the following 
appears : 

"The telephone long distance rates * * * j-un from 
four to eight times the rates prevailing on the Continent of 
Europe." 

In support of this statement, the honorable gentleman produces a table, 
which table appears in the printed copy of the speech which I have read. 
The table as printed shows that for a 25-mile haul the Bell rate here is 25 
cents against an average of 7 cents in Europe. For a 700-mile haul, the 
average is $4.20 here against 45 cents abroad. The table shows, however, 
that there are only three countries in Europe (Sweden, France and Ger- 
many) where a 700-mile haul is provided at any rate. The first 900-mile 
line was put in service less than two years ago, while on this side of the 
water, the 1,000-mile, Chicago-New York long distance line, was opened 
twenty years ago, and two years ago we bridged the 2,100-mile gap between 
New York and Denver. 

PURCHASING POWER OF MONEY. 

In considering this matter we must not forget that the purchasing power 
of the dollar here and abroad is not the same. Representatives of the tele- 
phone department of a European government, studying conditions here, stated 
a few days ago that the rate of $60.00 per annum for telephone service in 
their country was approximately a rate of $150.00 here. While this compari- 
son may be a trifle overstated or understated, we all know that there is a 
marked difference. This for the obvious reason that labor and materials are 
very much cheaper abroad than in this country. The working day in Europe 
is a longer day than is the working day here, and the wage scale does noi 
begin to approach ours. 

CHARACTER OF SOME GOVERNMENT OWNERSHIP 

ARGUMENTS. 

In an effort to show that our Post Office is the most efficient in the world 
and our telephone system less efficient than some of the government owned 
systems in Europe, Mr. Lewis resorts to the most amazing use of statistics. 

The total number of pieces of mail is divided by the total number of 
government employees in the various countries. He utterly ignores the fact 
that a large part of the work of handling the mail in this country is done 
by employees of contractors, while abroad it is handled by the post office 
employees directly. Naturally, it is not surprising that the number of pieces 
of mail handled per government employee is greater here than abroad. 

The method of using the telephone statistics is equally astonishing, even 
assuming that the statistics themselves are correct. The total number of 

— 8 — 



messages, say in Norway and this country, is divided by the total number 
of employees, not only operators, but men engaged in building pole lines, 
conduits and other construction work, agents engaged in soliciting new busi- 
ness, and a large maintenance force looking to the upkeep of the property — 
something sadly neglected in government owned systems. 

Again, the method of computing calls may vary widely. In some coun- 
tries every request for a telephone connection is counted; in others, if a 
subscriber has talked three minutes and wants to continue the conversation 
he has to get another connection when he can, and this is again counted; 
some countries also count the message going through two exchanges as two 
messages, one for each, although it would be one and the same conversation. 
Some countries compute the number of calls per subscriber's line; others, 
the calls per telephone station. In American statistics only actually com- 
pleted connections are counted, and the same conversation is counted only 
once, no matter how many exchanges it may pass through, or how long its 
duration. Of course, in all of this talk about efficiency, not one word is said 
about the quality of the service rendered. The American idea of efficiency 
is that the operator be waiting to serve you — not you waiting for the operator. 
While talking of the efficiency of government service, I might refer you to 
other branches of government activity. Turn to the current issue of "Every- 
body's Magazine," and observe there what Mr. William Hard writes of the 
Patent Office. Here are a few of his conclusions: 

"The (Patent) Office is undermanned, underpaid, under- 
equipped, and vilely housed, thwarted in its supreme service 
to American business and even perverted from that service by 
the costly economy of the Congress of the United States. 

"The money Congress ought to spend and does not spend 
in the Patent Office is one of the heaviest burdens it lays on 
the business of the country. 

"The building in which the Patent Office is located is so 
bad that the Commission on Economy and Efficiency said: 
'Any permanent improvement in the work done by the office 
must wait upon the provision being made for adequate office 
accommodations.' " 

Mr. Lewis in his speech presented many statistical tables, statistics that 
must be presumed to be correct in that they were presented by a responsible 
law maker in an effort he is making to secure legislation that will, if carried 
to its logical conclusion, bring about absolute paternalism in this great 
government of ours. And yet his statistics are so inaccurate, so biased, 
so unfair, as to amount to an outrageous imposition upon Congress and 
upon the country. 

We find him quoting $228.00 per annum as the rate charged for busi- 
ness Individual Line service in New York City, leaving it to appear that 
that is the only rate charged. The fact is more than 50 per cent, of the 
subscribers pay $48.00 or less per annum, while less than ^ of 1 per cent, 
pay as much as $228.00 for that class of service. He also quotes the rate 
in Trenton, N. J., as $36.00 per year, and implies that this low rate is due to 

— 9 — 



competition. As a matter of fact, gentlemen, Trenton has the same schedule 
for Bell service as has Albany — $36.00 for 600 calls, or $60.00 for unlimited 
service. He cites the rate in Washington as $168.00. This rate, as in the 
case of New York, just referred to, is for a very large number of messages, 
and is paid by a very small minority of subscribers, the great majority get- 
ting service at rates much below his figures. 

Here is another example of the "statistics" quoted by Mr. Lewis. He 
has spoken so frequently and so warmly of the efficiency and the low rates 
of the telegraph service in New Zealand — twelve words for 12 cents — ^that 
I was interested, and desiring to know the actual conditions, inquired by 
cable of a reliable source. Here is the cable I received in reply: 

"New Zealand Government Tariffs for telegrams within 
New Zealand are — (A) for urgent messages, one shilling [that 
is 25 cents] for twelve words or less, additional words one 
penny [that is 2 cents] ; (B) for ordinary messages, sixpence 
[12 cents] for twelve words or less, additional words one half- 
penny. Address and signature counted and charged for." 

In this country, you know, of course, there is no charge for address or 
signature. Hastily drawn conclusions, you see, may be very misleading. 
New Zealand evidently is Utopian only when viewed from a long distance. 
I remember several years ago the Chief of the Department of Posts and Tele- 
graphs at Wellington spent some time with us in New York City, studying 
our methods. He spoke most admiringly of our telephone system ; referred 
to it as the best service in the world, and regretted that because of government 
handicaps, he was unable to put into practice some of our methods. Parti- 
cularly was he interested in the manner in which we were extending the service 
by means of our selling organization, combining an aggressive canvassing 
and advertising policy. It would be beneath the dignity of the government 
he said, to solicit business from the public. 

Only a few days ago, Bertram Shadwell wrote a letter from far away 
Mandalay in Upper Burma, in which he described his experiences on the 
government-owned railroads of New Zealand. Instead of the remarkable 
railroad efficiency he had been led to expect, Mr. Shadwell declared that 
he found that trains ran at inconvenient hours; that waits of from twelve 
to fourteen hours at desolate junctions for so-called express trains to im- 
portant points were frequent; that bad food, poorly ventilated and wretched 
sleeping cars, and exorbitant excess baggage charges were his lot. He also 
stated that from midnight on Saturday until midnight on Sunday, the whole 
railroad plant lies idle. 

In the "New York Sun" of February 17th, Albert R. Gallatin wrote:— 

"Since the French Government took over the Western 
Railway its service has depreciated and the number of em- 
ployees has greatly increased. New Zealand purchased the 
railways with 4 per cent, bonds and the investment under 
government ownership has never returned more than 3 per 
cent. The service is also miserable. The Italian Govern- 

— 10 — 



ment is planning a large loan to reconstruct its railways, 
which are a joke. It has just come to light that $40,000,000 
has been wasted by the Canadian Government in building 
the eastern extension of the Grand Trunk Pacific. The Inter- 
colonial Railway is operated at a loss. The Prussian Govern- 
ment grants special rates to the Silesian mine owners in order 
to compete with Welsh coal at North Sea ports. The Panama 
Railroad, controlled by the United States Government, 
charges more for service than any other railroad in the world. 
The New York Municipal Ferry annually shows a deficit. 

"In spite of the fact that the Post Office Department 
charges no interest against its investment and is underpay- 
ing the railways for carrying the mails, it is trying to ad- 
vance the rate for carrying magazines ; another branch of 
the government is attempting at the same time to prevent 
an advance in rates on our privately owned railroads, which 
are under the necessity of remaining solvent. The telephone 
and telegraph systems, under private management in this 
country are vastly superior to those owned and operated by 
the government in England and on the Continent. 

"Are these facts which I have cited to be advanced as 
arguments in favor of government ownership of public utili- 
ties? Favoritism, rebating, graft, inefficiency, financial loss 
and depreciated service are everywhere the result of govern- 
ment ownership of railroads, telephones and telegraphs. 
Will this country profit by the experience of others? I am 
inclined to think it will." 

A TELEPHONE IN EVERY HOME. 

Mr. Burleson and Mr. Lewis both urge that Government ownership would 
extend the telephone to every man's home. Yet both propose that those 
small companies many of them guided and assisted by the big commercial 
companies which have extended and are extending their services through 
the sparsely settled sections, should be left alone. In other words, while 
they say there ought to be a telephone in every man's home, they are will- 
ing to leave it to private enterprise to place the telephone there. Has the 
government really extended its postal facilities to every man's home? How 
many of you touring through the country have not seen at a fork from the 
main road a cluster of post boxes. The country folk, living for many miles 
down that side road, are compelled to maintain a box on the rural delivery 
route because there is no such route by their doors. The Bell system today 
reaches more than 5,000 places where the government does not even have 
a post office. The rural telephone development in this country is something 
quite unknown in European countries. Some years ago, there was an In- 
ternational Balloon Race from St. Louis eastward, and the British com- 
petitors came down in a farmer's yard in Ohio, miles from a railroad station. 
One of the aeronauts expressed his surprise that there in an ordinary farm- 
house, he should find a telephone ready to transmit a message to the next 
neighbor, a telegram to New York, or a cable to his family in England. This 
universality of the telephone is so much a matter of course with us that we 
do not realize the effort that has brought it about. As one who spent a good 

— 11 — 



part of his apprenticeship with the Bell selling organization and as one who 
has kept in close touch with that selling organization, let me assure you, 
gentlemen, that it did not, like Topsy, just grow. Every telephone put into 
the American farm-house and every other home, for that matter, stands for 
aggressive, skilful selling. 

THE REPORT OF THE POSTMASTER GENERAL. 

The report submitted to Congress by Mr. Burleson contains many evi- 
dences of lack of knowledge. You will remember it was stated in that 
report that the telephone buildings need not be purchased because the tele- 
phone plant could be easily moved into the Post Offices and one building 
accommodate both services. You all know something about the accommoda- 
tions in your Post Office here in Albany. I should like to have you view our 
buildings, go through our various Central offices, look over our apparatus, 
and then decide for yourself the reasonableness of Mr. Burleson's statement. 

In Albany we are now occupying eight buildings, containing thirty-eight 
thousand square feet of floor space, and, as you know, have planned, and are 
now building a magnificent ten-story building to take care of what we con- 
sider will be Albany's need for telephone service in the future. I have had 
bound in the printed copies of this paper a diagram showing a typical tele- 
phone building. It is of our Spring Exchange in New York City, and is one 
of fifty-six such buildings in that city. If you but glance at this diagram you 
will see the absurdity of the really seriously suggested proposition that our 
plant and equipment be transferred to the already over-crowded post office 
buildings. The "Newburgh Journal," commenting on Mr. Burleson's plan, 
says : — 

"Here in Newburgh, the present post office building is 
inadequate for the postal business only, and to suggest that 
the equipment now in the telephone building, a structure 
larger than the post office, could be housed in the cramped 
quarters of the post office certainly has elements of humor. 
If the committee which favors the absorption by the govern- 
ment of the telephone and telegraph lines has as much real 
practical knowledge of the postal department as it has of 
these great public utilities, it is no wonder the postal depart- 
ment pays no dividends." 

SOME EXAMPLES. 

The same siren songs we are now hearing from government ownership 
advocates were sung several years ago to the British public. The service 
was to be better — rates less — working conditions improved. The awakening 
has come. The service is worse. Employees are threatening a general strike 
because of miserable pay and poor working conditions, and the Postmaster 
General is apologizing to the public for failure to make any reduction in 
rates. Our neighbor, Canada, has had the same experience. On Janu- 
ary 1st, 1908, the Province of Manitoba purchased the privately owned tele- 
phone system. Though the Premier and Attorney General had promised 
better service at half cost, the actual results were that within two months 

— 12 — 



after the government took over the service, the rates in the city of Winnipeg 
for certain classes of service were increased 25 per cent. Then in succession 
came the introduction of inferior party line service, an increase in the long 
distance rates and a decrease in the time limit, and a general increase in 
exchange rates throughout the province. In spite of the increases in rates, 
the chairman of the telephone commission reported in November, 1911, a 
loss for the year of $150,000, without making any provision for depreciation. 
The "Montreal Gazette," in commenting upon this condition of affairs, said : — 

"It is not well to put the cost of a personal service for 
some of the people upon all the people." 

Here in America also, we have tried government ownership. After fifty years 
of political management, North Carolina leased its railroad lines to a private 
company. Maryland sold what was left of the Western Maryland Rail- 
road about eight years ago; and Texas is now trying to unload its road 
upon some private company. Not only were these roads financial failures, 
but they utterly failed to adequately serve the public. And the railroad now 
operated by the United States Government in the Canal Zone charges the 
highest rates in the world for similar service. 

You, gentleman, recall the recent newspaper statements that $40,000,000 
had been needlessly expended in building a government railroad in Canada. 
A private enterprise builds better and cheaper than the government. This 
is a well known fact, and it is one reason why our battle-ships are built by 
private concerns. We build our telephone systems cheaper here in America 
than the governments do in Europe, although our equipment is admittedly 
better and the cost of labor and of material is higher here than abroad. 

I show here a table of investment per telephone, both here and abroad : — 

Average Inveitment 
Per Station 

In six European countries — 1912 .$197.00 

In the United States (Bell System)— 1913 143.00 

Even Mr. Lewis pays tribute to the soundness of our financing — admitting 
there is no overcapitalization of the Bell system. 

To my mind, gentlemen, it is a question of service and of rates. Ad- 
mittedly, we are giving you the best service in the world. Our telephone 
system is regarded as a model, and experts come from all over the world 
to study it. It is the admiration of every visitor, and our strongest sup- 
porters and admirers are those Americans who have tried the government 
owned systems abroad. As an example, here is a letter from a Philadelphia 
business man, residing this winter near Nice, France, to an American news- 
paper : — 

"I feel satisfied if any of the gentlemen who are advo- 
cating government control of the telephone and telegraph lines 
in the United States would come and live in France for 
a few months, that he would pray for any ownership rather 
than that of the government." 

— 13 — 



The best possible telephone service is what the American people demand. 
You business men of Albany would not tolerate the Hungarian or the 
English service at any price. The progressiveness of American business men 
is recognized the world over. The progressive American never goes back 
to the ox-cart when a wagon is available, or to a wagon when a motor truck 
is available. He believes in individual enterprise and he practices more than 
any other man in the world, the slogan that "time is money." And yet 
government ownership advocates are comparing the "ox-cart" telephone serv- 
ice of European countries with the "motor truck" telephone service of this 
country, as if on an equal footing. 



COST OF LIVING. 

It seems to me that a very telling example of the efficiency shown in 
the management of this great privately owned telephone system, which is 
today the great nervous system of our business world, appears in a diagram 
bound herein that shows that while the necessities of life, the food stuflFs, have 
gone up tremendously in price, telephone rates have steadily gone in the 
other direction. 

PRIVATE GAIN. 

I have watched the telephone business in its great growth in this country, 
and I can say that I have never seen anything to suggest that the great 
developers, the organizers, the engineers, and the workers generally have in 
any degree been actuated by private gain ; nor do I believe that private gain 
is the controlling force that sends men pioneering in any lines of endeavor. 
The Chief Engineer of the American Telephone & Telegraph Company talks 
to me about that great accomplishment of establishing commercial telephone 
communication between Boston and Denver, not with the boast that attends 
success in private gains, but with the glowing enthusiasm that is the pos- 
session of the man with the great mind, the output of which proves a boon 
to all mankind. 

Nor does one observe the microbe of private gain at work in the system 
of the great organizer who finds the funds with which to bring to the public 
the benefits of the great work of the inventors ; the profits that come from 
the operation of these wonderful lines are anything but startling in amount. 



CONCLUSION. 

If the government has a right to own telegraphs and telephones, it has 
a right, so says the "Washington Post," to own railroads, steamship lines, 
aeroplane lines, and every other medium of interstate communication and 
intelligence existing or to be invented. If it is the duty of the government 
to acquire the telegraph, it is its duty to acquire the railroads, and it should 
not shrink from its duty. There is no half-way station. The policy is 
either right or wrong, and it must be fought out to the end. Before any 

— 14 — 



American citizen commits himself to this most momentous change in the 
structure of his government, let him study well the safeguards provided for 
the perpetuity of the nation, and consider whether they should be discarded. 
Let him be prepared to abolish the States and set up an absolutism at Wash- 
ington, if he should decide to substitute "expediency" for eternal principles. 



COST OF TELEPHONE SERVICE COMPARED WITH COST OF 

FOOD SUPPLIES. 

/30% 



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90 
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70 
60 
30 
40 
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Cost of telephone service is constantly 
decreasing in spite of the great increase 
in the cost of food supplies. 



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Per cent Increase in Cost of Staple Food Supplies since 1900 
Per cent Decrease in Cost of Telephone Service since 1900 



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SECTIONAL VIEW OF A 
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